LONDON (Alliance News) - Standard Chartered PLC on Wednesday said it returned to underlying profit in the first half of 2016 but said the outlook for the rest of the year has become more cautious and it expects trading in the balance of the year to remain subdued.
The emerging markets-focused bank said it made a pretax profit of USD893.0 million in the six months to the end of June. This marked a return to profit against the USD3.62 billion loss reported in the second half of 2015, but was much lower than the USD2.10 billion profit it made a year prior.
Underlying pretax profit, stripping out one-off effects, was USD994.0 million, compared to a USD990.0 million loss in the second half of 2015 but around half the USD1.82 billion profit the group made in the first half of 2015.
Underlying operating income for the first half was USD6.81 billion, down from USD6.94 billion in the half to the end of December but off 20% from the USD8.50 billion reported for the first half of 2015. Operating income was stable in the first two quarters, but sluggish activity in the group's main markets resulted in the year-on-year fall.
Standard Chartered said it will not pay an interim dividend for the first half of 2016 as it continues to work to restore its financial health.
The FTSE 100 bank said it was seeing signs of stabilising income and remains on track to meet its cost-saving targets for the year. But Standard Chartered said economies globally have slowed, and the outlook is more cautious than when it set out its restructuring plans in November last year.
Standard Chartered said activity in 2016 is expected to remain subdued, and it will likely take longer for the company to meet its return on equity target of 10% than had previously been expected. The comment about return on equity echoed a similar admission made by peer HSBC Holdings PLC earlier Wednesday.
Standard Chartered shares were up 3.8% to 611.90 pence following the late morning announcement in London. HSBC shares were up the same 3.8%.
"The group's performance in the first half of 2016 has demonstrated the management team's early progress on the actions we believe will drive a sustainable improvement in financial returns. Importantly, we have returned to underlying profitability in the period, despite the more difficult market conditions," said Standard Chartered Chairman John Peace.
The interim results from the bank follow its appointment last week of Jose Vinals as chairman-designate. Vinals, financial counsellor and director of the monetary and capital markets department of the International Monetary Fund and former deputy governor of Spain's central bank, will take over from Peace on December 1.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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HSBC Holdings (HSBA)
Standard Chartered (STAN)
